Cartel damages claims and the passing-on defense
In: Discussion paper series 6329
In: Industrial organization
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In: Discussion paper series 6329
In: Industrial organization
In: The economic journal: the journal of the Royal Economic Society, Volume 124, Issue 578, p. F389-F392
ISSN: 1468-0297
In: The Manchester School, Volume 70, Issue 1, p. 115-133
ISSN: 1467-9957
This paper proposes a reduced form approach to identify the presence of 'monopoly' market power in markets with vertical product differentiation. In a general model I derive an explicit solution for the reduced form pricing equations under the hypothesis that prices are set to maximize the joint profits of all products. The central comparative statics result states that each product's price depends only on its own quality and not on the quality of its competitors. This contrasts with the solution under Bertrand–Nash behaviour and thus provides an identification argument for conduct under vertical product differentiation. I propose empirical tests implied by this result. They require only the data used in popular hedonic studies (prices and physical characteristics). The tests are applied to the US market for spreadsheets and to the French market for optional car engines.
In: The Rand journal of economics, Volume 33, Issue 2, p. 275
ISSN: 1756-2171
In: The Rand journal of economics, Volume 27, Issue 2, p. 240
ISSN: 1756-2171
In: Journal of political economy
ISSN: 1537-534X
In: Kilts Center at Chicago Booth Marketing Data Center Paper
SSRN
In: CEPR Discussion Paper No. DP17367
SSRN
In: Economics of education review, Volume 66, p. 223-244
ISSN: 0272-7757
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Working paper
In: Journal of labor economics: JOLE, Volume 30, Issue 3, p. 591-626
ISSN: 1537-5307
In: The Rand journal of economics, Volume 43, Issue 1, p. 26-50
ISSN: 1756-2171
How does an upstream firm determine the size of its distribution network, and what is the role of vertical restraints? To address these questions, we develop two empirical entry models. In the benchmark coordinated entry model, the upstream firm sets market‐specific wholesale prices and implements the first best. In the more realistic restricted/free entry model, the upstream firm only sets a uniform wholesale price. As a second‐best solution, it restricts entry in markets where business stealing (encroachment) is high, and allows free entry elsewhere. We apply the model to magazine distribution, and assess the profitability of alternative vertical restraints. Banning restricted licensing reduces profits only slightly, so the business rationale for restricted licensing should not be sought in the prevention of encroachment. Furthermore, market‐specific wholesale prices implement the first best, but the profit increase would be small, providing a rationale for the commonly observed uniform wholesale prices. Finally, uniform franchise fees are much less effective than a uniform wholesale price to cope with local market differences.
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Working paper
In: The Rand journal of economics, Volume 39, Issue 4, p. 949-972
ISSN: 1756-2171
In many countries, pharmacies receive high regulated markups and are protected from competition through geographic entry restrictions. We develop an empirical entry model for pharmacies and physicians with two features: entry restrictions and strategic complementarities. We find that the entry restrictions have directly reduced the number of pharmacies by more than 50%, and also indirectly reduced the number of physicians by about 7%. A removal of the entry restrictions, combined with a reduction in the regulated markups, would generate a large shift in rents to consumers, without reducing the availability of pharmacies. The public interest motivation for the current regime therefore has no empirical support.
In: American economic review, Volume 109, Issue 6, p. 2137-2172
ISSN: 1944-7981
We study a generous program to promote the adoption of solar photovoltaic (PV) systems through subsidies on future electricity production, rather than through upfront investment subsidies. We develop a tractable dynamic model of new technology adoption, also accounting for local market heterogeneity. We identify the discount factor from demand responses to variation that shifts expected future but not current utilities. Despite the massive adoption, we find that households significantly discounted the future benefits from the new technology. This implies that an upfront investment subsidy program would have promoted the technology at a much lower budgetary cost. (JEL C51, D15, Q48, Q58)